Condominium Insurance: Does Your Condo Look Good to Insurers?
As a condominium director, owner or property manager, it is likely you have been dealing with an increase in insurance premiums of late. Ask any insurance professional and they will tell you that this market is the toughest they have seen. Residential and commercial property policies are seeing the biggest increases in this ‘ hard market ’. Condominiums across the country have experienced increases year over year in the 10 - 50% range, and some even as high as 300%. When the market has seen an increase in claims paid and a decrease in overall profit, insurance companies will set stricter requirements to obtain insurance, and premiums will be more expensive. As we see the frequency of claims rise due to water damage to property, slip & fall lawsuits and the greater incidence and intensity of severe weather events, insurance companies are required to tighten up their bottom line. They achieve this by increasing rates and reducing capacity. Insurance for condominium corporations has not been profitable for insurance companies for many years causing insurers to limit their exposure (underwriting fewer policies) and/or charge a much higher rate. This challenging time provides brokers with the opportunity to really show their condominium clients how to take control over their insurance program. By encouraging our clients to make an investment in a long - term plan to reduce their overall risk and put policies and procedures in place to mitigate future losses, our clients recognize the fact that they can take an active role throughout the process.
How can a Condominium Corporation make itself a better risk to the insurance companies? 1. Start the renewal process well in advance The process doesn ’ t start at the renewal date. Starting the renewal review well in advance of policy expiry allows your broker to assist with painting the best possible picture of how the Corporation is working to reduce the likelihood of future losses and make itself appear as a better risk to insurance companies. This can be done by implementing routine programs to check sump pumps, clean dryer vents & ducts, clean plumbing stacks, check/replace smoke detectors, etc. These items may not be the responsibility of the Corporation to maintain, but it is in the Corporation ’ s best interest to
Tricia Baratta (RIBO Ont) is an Account Executive — Commercial Insurance, Gallagher Canada. Her span of training has been extensive in condominiums, including administrative services, former condominium manager, restoration specialist and more. Tricia was first elected to the CCI Board in 2015. She was the co-chair of the Education Committee from 2017-2021. She has provided her expertise as an instructor both locally and provincially and has provided valuable contributions as a writer.
ensure they are all working properly to avoid a claim.
2. Improve the Corporation ’ s loss ratio The loss ratio is the amount an insurance company incurs in paid claims as a percentage of the premiums earned on a particular policy. Insurance companies want to know what claims have been made by the Corporation within the last 3 - 5 years. Corporations with more claims will have a higher loss ratio and will see an increase in premium as a result. In today ’ s market, making a claim for anything less than 2 - 3 times the deductible amount is not recommended. Insurance is meant to pay for major losses, not smaller or more frequent events. Although it is not ideal for the Corporation, it
CCI Review 2021/2022 —March 2022 - 9
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